Classification and Management of Spare Parts Inventory: Case Study of Automotive Part Industry

Abstract

Spare parts inventory management is a complex and crucial task that can affect the cost and effectiveness of the production processes. The objective of this research is to propose a classification method and spare parts inventory management policy of an electric vehicle battery manufacturer in order to solve the problem of high inventory costs and shortages of spare parts when needed. This research focuses on integrating ABC analysis with VED analysis aided by Analytical Hierarchy Process (AHP) techniques in criticality assessment and grouping of spare parts according to their priority level. The research collected data on spare parts available in the database between 2021 and 2023, which totaled 1200 items, and selected 115 moving spare parts for study, equivalent to a total expenditure of 2,093,415 baht. AHP-aided VED analysis identified 3 criteria for evaluating the criticality of spare parts: 1) significance to production, 2) type of spare parts, and 3) ordering lead time. Using ABC-VED matrix, spare parts were classified into 3 classes according to their importance from highest to lowest. Classes 1, 2, and 3 accounted for 12.17, 50.44, and 37.39 percent of spare parts, representing 65.12, 26.77, and 8.11 percent of the total expenditure value, respectively. The research proposed the reorder point Max-Min method for managing spare parts inventory for class 1 and 2 whereas order as required policy should be used for class 3 spare parts. This research is beneficial to the case study company, which is an automotive parts manufacturer, by significantly improving the efficiency of parts inventory management and machine maintenance systems.